(MENAFN) Nobel-Prize-winning economist Paul Krugman stated that the offered currency union among Argentina as well as Brazil is a "terrible idea” fantasized up by a person with a partial understanding of finances, adding to international disapproval of the strategy the two nation’s presidents are trying to achieve.
"A shared currency may make sense between economies that are each other’s major trading partners and are similar enough that they won’t face large asymmetrical shocks,” Krugman stated in a Twitter thread on Sunday.
In spite of being neighbors and exchange partners, Brazil sends just 4.2 percent of its shipment to Argentina, whereas Argentina’s shipments to Brazil are 15 percent, as stated by Krugman.
He also noted that the nations’ exchanging structures differ massively, with Argentine shipments being mostly all agriculture, while over 50 percent of Brazil’s being produced goods or fuel. "So shocks to the world economy likely to cause big changes in equilibrium real exchange rate,” Krugman published in a written statement.
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